Energy Performance of Buildings to become increasingly important
There are proposed new rules currently being considered by the Scottish Government that could have serious financial implications for owners of older commercial properties.
The Scottish Government has published draft regulations (The Assessment of Energy Performance of Non-Domestic Buildings (Scotland) Regulations) which are scheduled to come into force in September 2016.
As drafted, the regulations will apply to all commercial properties with a floor area greater than 1,000sqm. The regulations are significant for commercial property owners as they specify that a commercial building must have a minimum energy performance level. Whilst we are still waiting on detailed guidance, it is envisaged that a sale or grant of a new lease of a qualifying property would trigger the need to meet the new regulations.
At present, if a commercial property is sold or a new lease granted, the seller, or landlord, has to provide what is known as an Energy Performance Certificate for the property which assesses the energy performance of a building. However the rating of the building doesn’t in fact matter to most tenants or purchasers.
Going forward under the new regulations, if a building’s energy rating is poor, the seller or landlord may require to carry out expensive energy improvement works to meet the new minimum standard imposed by the Scottish Government. At this stage we believe the Scottish Government will likely require commercial premises to have a minimum of an E rating. If therefore you wish to sell or rent a commercial property with an F or G rating, you may be forced to carry out improvement works to improve the energy efficiently.
If below the minimum threshold, an action plan would be required to be produced by a qualified assessor (at an additional cost) to assess the works needed to improve the energy efficiency of the property to enable it to meet the minimum standard. If improvement works are required, the owner has two options – (a) to complete the upgrades within 42 months, or (b) to defer the works. In the interim the owner must keep an accurate record of the property’s energy consumption with a view to reducing the energy consumption of the property concerned.
If you fail to comply with the regulations, there will be a penalty charge and enforcement will lie with the local authority.
It is envisaged that we will receive more detailed Government guidance in the coming months as no clarification has been given as yet as to what happens with buildings with multiple occupiers, listed or historic buildings or even what rating will be the minimum standard applicable for a property or what is involved in deferring the works.
Further information will be posted as as more guidance becomes available.